Just to clarify, a sole proprietorship can only have one owner. Period. End of Story. There are no exceptions. So if you both own the business, it is not in any way, form or fashion a sole proprietorship. At best, it is a qualified joint venture (QJV) where each of you treat your "share" of the business as a completely physically separate sole proprietorship. That means that each of you will file your own physically separate SCH C that is a physical part of your joint 1040 tax return. You split everything 50/50 right down the middle.
Otherwise, what you have is a partnership that will file it's own physically separate 1065 partnership return.
